Update on the bank run of Legacy rural banks

Please use this thread to post any official updates related to the bank run of rural banks under the Legacy Financial Group. We will delete posts that are irrelevant and would not be of help to anyone looking for information about the Legacy bank run.

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PDIC takes over Parañaque bank, the third to go on holiday this weekFrom GMANews.tv - Dec. 10, 2008

The Philippine Deposit Insurance Corp. (PDIC) has taken over the Rural Bank of Paranaque, Inc. (RBPI), the third domestic lender to declare a bank holiday this week.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) placed the lender under receivership following its declaration of a bank holiday on December 8 through resolution number 1616 issued on December 9.

“PDIC is mandated to gather and preserve the assets and liabilities of the bank, as well as control, manage, and administer its affairs. This is done for the benefit of both depositors and creditors of the bank," the PDIC said in a statement issued Wednesday.

PDIC President Jose C. Nograles said the state deposit insurer will “promptly pay" valid claims of RBPI clients.

“The speed of payout will depend on the availability of and state of bank records and completeness of documentary and other requirements submitted by other claimants," Nograles said in the same PDIC statement.

Early this week, two Cebu-based rural lenders declared a bank holiday, disallowing its customers from withdrawing their money.

These lenders were identified as the Filipino Rural Bank in Argao, Cebu and the Philippine Countryside Rural Bank with branches in Mandaue City, Liloan City and Lapu-lapu City, all in the Central Visayas.

All three banks—the Filipino Rural Bank, the Philippine Countryside Rural Bank, and RBPI—are reportedly subsumed under the Legacy Group, which is controlled by businessman Celso de los Angeles.

The Bank Sentral ng Pilipinas (BSP) has placed under receivership seven of 10 rural banks of the Legacy group nationwide.

These are :

1. Philippine Countryside Rural Bank (PCRB) with branches in Mandaue City, Lapu-Lapu City and Liloan in Cebu,2. Bank of East Asia based in Minglanilla, Cebu3. First Interstate Bank in Tacloban City.4. Rural Bank of Paranaque5. Rural Bank of Bais in Negros Oriental6. Pilipino Rural Bank (with branches in Mandaue and Argao in Cebu and Tagbilaran City in Bohol)7. Rural Bank of San Jose in Batangas.

"The receivership enables the PDIC to take-over the banks' assets to protect the interest of bank depositors and to start processing deposit nsurance claims", BSP said in a statement.

State deposit insurers on Sunday assured that they will assist depositors of rural banks that have recently declared bank holidays.

A GMA Flash Report said Philippine Deposit Insurance Corp. (PDIC) president Jose Nograles has assured that his office is drawing up measures for a swift payout to depositors of closed banks under its receivership. The receivership order meant the responsibility of recouping the bank’s unpaid loans has been transferred to the PDIC.

Nograles said the PDIC augmented its workforce to speed up the process of verifying the legitimacy of depositors’ claims.

“As a matter of procedure, PDIC conducts examination to validate claims…However, the sheer volume of accounts involved would mean a longer time would be needed,” Nograles said.

Nograles said the PDIC will soon release a schedule of the payouts, adding that depositors of closed banks under its receivership will receive a P260,000 safety deposit guarantee.

Operations are temporarily suspended when a financial institution declares a bank holiday. The Flash Report, however, quoted BSP officials as saying that depositors of closed banks should not yet panic, saying that declaring a holiday does not necessarily indicate bankruptcy.

MANILA, Philippines -- Nine rural banks in the Philippines are under investigation for "potentially unsafe and unsound banking practices," the Bangko Sentral ng Pilipinas, the country's central bank, said Wednesday.

The banks, which have been put into receivership, declared holidays earlier this month after depositors rushed to withdraw their money.

The central bank said it had been "monitoring these banks well before the global financial turmoil because of potentially unsafe and unsound banking practices". It did not elaborate these practices.

It stressed: "These banks represent a tiny fraction of the banking system and... the Philippine banking system remains stable, highly capitalized and highly liquid."

The central bank said the Philippine Deposit Insurance Corp. would take over the lenders' assets to protect depositors while insurance claims are processed.

The central bank examined the books of the nine lenders last year, but they all secured lower court rulings that stopped the its policy-making Monetary Board acting on the report of that probe.

The Supreme Court in turn blocked the lower court writs last month, enabling the central bank to act against the nine, the central bank statement said.

The banks are the Dynamic Bank, Rural Bank of San Jose, San Pablo City Development Bank, Rural Bank of Paranaque, Rural Bank of Bais, First Interstate Bank, Pilipino Rural Bank, Bank of East Asia, and Philippine Countryside Rural Bank.